Government of India, Ministry of
Communications and Information Technology (MCIT) has released
the national Policy on Electronics 2011 (NPE 2011) outlining the
policies of the Government for the IT sector. The policy has
implications on all present and future businesses in IT software
and hardware.

The report records that the global size of
the electronic industry is presently US$ 1.75 trillion and set
to grow to 2.4 trillion by 2020. (1 trillion US$=approx
50,00,000, crores). The Indian demand is expected to be US $ 400
billion by 2020. (1 billion US$=approx Rs 5000 crores).

The domestic production in 2008-2009 was
about Rs 100,000 crores. The policy recognizes that 90-95% of
this huge Indian production market is presently benefitting
foreign players and the value addition in India is only 5 to
10%. It is estimated that by 2020 only 25% of the domestic
demand is met by indigenous production and the balance need to
be imported.

Thus there is a huge opportunity loss for the
Indian economy unless the trend of foreign dependency is not
reversed.

It is also necessary for us to remember that
there is a huge security risk for the country in this foreign
dependence since most of the hard ware supplies is from China
which is known to be implementing a policy of Cyber intrusion
through manufactured products.

The report recognizes the critical need to
develop indigenous ESDM (Electronic Systems Design and
Manufacturing) industry in India through a policy initiative and
this policy tries to address this issue.

The vision statement is therefore rightly
focussed creating a globally competitive ESDM industry to meet
the Indian needs and also serve the international market.

.. A truly laudable vision ..long overdue.

Mission:

In pursuance of the above vision it is
inteded to promote and develop indigenous
manufacturing in the entire value-chain of ESDM within the
country.

It is also intended to promote a vibrant and
sustainable ecosystem of R&D, design and engineering and
innovation in Electronics.

Specific Objectives of the Policy:

One of the objectives set out is to achieve
global leadership in VLSI. This would require attention on the
Engineering Education system too. Special focus on augmenting
the Post Graduate education in the area is also envisaged.
Educational institutions may take note of this policy
initiative.

The policy indicates a need to create long
term partnerships between ESDM industry and strategic sectors
like Defense, Space and Atomic Energy etc. This is an area of
concern due to the security implications.

Government of India has already allowed
Chinese intrusions into strategic areas such as Internet
backbone and also involved Chinese companies in security
initiatives with IISc. Now the policy of "long term partnership"
could open doors for Chinese companies to intrude directly into
critical national infrastructure.

This area is a matter of concern and needs to
be watched closely.

Rest of the policy objectives are aimed at
more production at affordable costs and are welcome. A policy on
e-waste management is also included since it is part of the
development requirement.

Strategies for Discussion

The first strategy initiative suggested is
the fiscal incentives for the development of the ESDM sector.
Given the political issues involved in resolving economic policy
conflicts we need to wait how these incentives are packaged in
terms of removing the difficulties of providing land,
electricity, water and such other facilities in an uninterrupted
manner and on very large scale and economic cost as may be
demanded by the industry.

Power will continue to be a bottleneck and
with the politically motivated opposition to various power
projects this would perhaps be a major bottleneck. We may
therefore need a separate sub policy for "Power for ESDM
sector".

The second most important strategy suggested
is to provide preferential market access for domestically
manufactured electronic products including mobile devices, In
many of the recent Government initiatives, both Central and
State Governments have decided to purchase Apple i Phones, i
Pads etc in large numbers. It is necessary to immediately put an
end to such purchases and divert the purchases to indigenous
products.

The Government is in the process of getting
the ESD Bill passed which will make E Governance Service
delivery mandatory in the next 5 years. This is expected to
provide a push to the use of IT in e-Governance projects and
therefore push up the demand for ESDM products. However the new
industry which the current policy may promote will not be ready
to meet the demand of the e_governance sector in the next few
years and hence the fruits of ESD Bill if any will only be
reaped by foreign suppliers of mobile and computer devices. By
the time indigenous manufactures enter the field the dependency
on the international suppliers will be so much that it would not
be possible for the Government to shift to the indigenous
manufacturers.

The policy fails to recognize the need for
development of an indigenous OS for Computers to reduce the
dependence on Windows systems. Similarly in the mobile segment
it is necessary to avoid dependency being built up on
proprietary systems. The policy is silent on this factor.

It is necessary that the current policy
support should be more towards open source products and later
indigenously produced products can be accommodated. In order to
ensure that progress is not hindered by such a policy it is
necessary to encourage international agencies to set up local
assembly and marketing agencies so that the value addition on
Indian soil is increased from the abysmal levels as seen at
present.

The third important strategy suggested is the
requirement of a "Stable Tax Regime" and it is suggested that a
stable tax regime of 10 years is planned. Considering the long
gestation periods involved the stable tax regime period may be
better increased to at least 15 years.

Overall the policy initiatives are well
meaning and the proof of the pudding is in the eating. We need
to see how the policy will be implemented. If the policy
implementation is not properly monitored, it can very well be
misused in a manner which will put the 2G scam to shame.

In order to make this policy corruption
proof, a separate authority for implementation can be considered
under GOI which should be accountable to a high power committee
consisting of Parliamentarians of all parties as well as
eminent members of the public and Judiciary. Such a committee
should have the powers to investigate and prosecute if necessary
and directly accountable toa multi member bench of the Supreme
Court.